ECB hikes rates by 50 basis points

• Main refi rate at 3.50% vs 3.00% prior
• Inflation projected to remain too high for too long
• Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior
• Deposit facility to 3.00% vs 2.50% prior
• Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term outlook in light of incoming data and dynamics
• Inflation ex food and energy continued to increase in Feb and staff expect average of 4.6% in 2023, higher than Dec forecasts
• Forecasts done before market turmoil
• Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025
• Banking sector sector is resilient, with strong capital and liquidity positions
• Policy toolkit is fully equipped to provide liquidity Liquidity Liquidity refers to the extent of a financial instrument’s ability to be bought or sold without causing price fluctuations. Thus, if an asset is extremely liquid, it means one can trade that asset in the knowledge that one’s specific dealing won’t create significant movements in the market.This is because there exists such a large number of traders going both long and short, generating huge volume for that particular asset. Liquidity in the FX MarketTake the example of the foreign exchange marke Liquidity refers to the extent of a financial instrument’s ability to be bought or sold without causing price fluctuations. Thus, if an asset is extremely liquid, it means one can trade that asset in the knowledge that one’s specific dealing won’t create significant movements in the market.This is because there exists such a large number of traders going both long and short, generating huge volume for that particular asset. Liquidity in the FX MarketTake the example of the foreign exchange marke Read this Term support to eurozone financial system if needed
• Growth forecast of 1.0% in 2023, 1.6% in 2024, 1.6% in 2025

There's no signal on future policy here, which is understandable but the market would have liked something dovish to go with 50 bps. The euro is about 20 pips lower on the headlines while stock futures have sagged.